Shares can be gifted both in demat form and physical form, but the procedure is bit different. Gifting of shares to another is legally termed as Transfer of Shares. Remember that any transfer of shares in physical form is not possible after December 05th 2018 after which only demat transfer requests will be entertained. SEBI has banned any physical share transfer after the date. However, transmission of shares in physical form can still continue. The following are the key steps for gifting shares in demat form.

The first step is that the donor is required to initiate an off-market transaction by submitting a Delivery Instruction Slip (DIS) to his Depository Participant (DP) for transferring shares from his (donor) demat account to the recipient demat account. When you fill up the DIS slip make it a point to clearly indicate that it is an off-market transaction by ticking the appropriate box.

Some of the key fields to be filled in the DIS include, name of the recipient, recipient demat account details, Share/Stock to be transferred with the appropriate ISIN Number of the Company, number of shares to be transferred (in figures and words) and signature as per master. Fill in all the details very carefully. Any small error can also lead to rejection of the DIS and the entire process needs to be initiated all over again. At the same time, the recipient is also required to give a receipt instruction to his/her DP to accept these shares, if standing receipt instruction has not been given. In most cases, this is not required since they give standing instructions to their DPs.

Do you really need to execute a Gift Deed while transferring these shares? Shares being movable property do not mandate the execution of a Gift Deed. However, it is always advisable to execute a gift deed on a non-judicial stamp paper mentioning details of the transaction for legal records. This is not only an audit trail but also useful in addressing any tax queries.